LONDON (Reuters) – World equities hit record highs on Tuesday, backed by strong economic data from China and the US, while the currency and bond markets took a breather after a month of rapid gains in dollar and government interest rates.
Shares measured by the 49-year-old MSCI All Country World Index reached a peak when European equities played catch-up gains in Asia and Wall Street overnight in their first trading session since the Easter holidays.
The pan-European STOXX 600 index hit a record high after opening in Europe.[.EU]
Profit-taking pushed Japan̵
The S&P 500 closed Monday with a record high, and futures dipped 0.2% on Tuesday. [.N]
On the heels of a bumper report on U.S. jobs on Friday, March, data showed service activity hit record highs. China’s service sector has also collected steam with the sharpest increase in sales in three months.
“We believe investors should not be afraid to enter the market at highs,” said Mark Haefele, Chief Investment Officer, UBS Global Wealth Management.
“We recommend that we continue to position for the reflection trade as the economic recovery accelerates – data released on Friday showed that US nonfarm wages rose by 916,000 in March, the largest gain since August. “
Yields on benchmark 10-year US government bonds fell to 1.7093%, while the US dollar has mostly missed a big return from the strong data, holding at $ 1.1819 per euro a day after posting its steepest fall since mid-March.
Elsewhere, Swiss lender Credit Suisse sought to draw a line during its exposure to the introduction of hedge fund Archegos Capital, announcing that debacle would cost it about $ 4.7 billion and two senior executives their jobs.
Stable government bond yields and the dollar follow a fee higher in the first quarter with a rise of 83 basis points in 10-year yields, the largest quarterly gain in a dozen years and a 3.6% rise in the dollar index – the sharpest since 2018.
“Bonds have settled down now,” said Omkar Joshi, portfolio manager at Opal Capital Management in Sydney, following a hard and fast sale. “I think markets can continue to ignite from here.”
Protocols from the US Federal Reserve to be held on Wednesday in March are the next focus for bond markets, although they will not address the latest data surprises, and the markets have been running far ahead of Fed projections for years with low interest rates.
Fed futures futures have priced an increase next year, while the euro dollar markets have priced it before December.
“What needs to be tested is how the Fed strengthens and reassures its flexible average inflation targeting policy,” said Vishnu Varathan, chief economist at Mizuho Bank in Singapore.
“The dollar’s last few weeks’ movement reflects markets moving forward despite what the Fed has said.”
The currencies were pretty quiet through the Asia session and hung on small gains on the dollar. The Australian dollar traded at $ 0.7647 after the central bank kept policy positions as expected.
The yen was a fraction softer at $ 110.21 per dollar, while sterling touched a two-and-a-half-week high of $ 1.3919. [FRX/]
The dollar wobble helped oil prices recover some losses suffered on Monday due to concerns that a new wave of COVID-19 infections in Europe and India could limit energy demand. [O/R]
Brent crude futures rose 1.4% to $ 62.98 a barrel, while US crude rose 1.5% to $ 59.56 a barrel. Gold rose 0.2% to $ 1,732 an ounce. [GOL/]
Reporting by Ritvik Carvalho; further reporting from Thyagaraju Adinarayan in London; and Tom Westbrook in Singapore; Edited by Nick Macfie